Not a destiny. National Corporate Networks Compared: Argentina and Italy, 1913-2010

This chapter analyzes the evolution of the structure of corporate interlocks by comparing Argentina and Italy from 1913 to 2010. In broad terms the evolution of the structure corporate networks in the two countries followed the waves of globalization, with higher density being reached in both countries during the interwar deglobalisation cycle, and a decline of the network during the recent second globalization wave. Italy had always a denser network than Argentina. The Italian network also proved to be more resilient over time as by 2010 the main component kept on accounting for 40 percent of total firms. By contrast, the main component in Argentina is much smaller in all benchmark years and in the 21st century plummeted to values lower than 10 percent of total firms. Thus, in recent years is no longer possible to speak of a national corporate network in Argentina as the Argentine network had disentangled in a number a smaller clusters that are surrounded by an increasing number of isolated firms. As regards board networks, differences in ownership structures and in state interventions’ type and timing – rather than changes in minority shareholders’ protection – proved key to understanding them. In Argentina, MNEs and family-owned DBGs played a more instrumental role. Indeed, firms deployed much less active interlocking strategies, the structure of the corporate network was embedded to a larger extent in the web of personal relations of the most prominent directors. In contrast, in Italy, local investors, banks and the State stood at the center of the stage and at least until the 1970s actively fostered the creation of a dense network. Also, Argentine and Italian corporate networks’ similarities in recent years may be attributed at least in part to the state’s withdrawal from the center of the economy as owner and to a change in the networking strategy of Italian SOEs. Overall, this chapter enriches the findings of Margaretic et al. (2024) regarding the impact of globalization waves on corporate networks. The description of the economic and historical processes in our chapter provides nuances that thes two authors did not explore, likely due to their broader sample of 15 countries. These nuances pertain to the specific dynamics among actors and their relevance or centrality in Argentina and Italy. For example, in Argentina, MNEs play a more significant role in the fragmentation process than in Italy. Conversely, in Italy banks play a more central role in the system. Moreover, both countries had an interventionist state, but Italian SOEs displayed a more active networking strategy than Argentine ones. In a nutshell, this chapter challenges the Law and Finance’s view that legal systems play a crucial role in shaping the structure of national corporate networks. This chapter shows instead that two countries sharing the same legal roots and other cultural similarities had very different economic performances and exhibited dissimilar corporate network structures. Thus, the legal system is not a determinant of destiny.